ONESOURCE State Analytics software makes accurate and thorough legal entity modeling a reality. Smart modeling wizards and optimization technology provide a quick and accurate method to evaluate restructuring opportunities in the existing structure, or as the need arises, such as during an M&A transaction.

The software enables your tax department to quickly perform a thorough analysis of potential structures and determine if there's a reduction in your state income tax liability. In addition to calculating the potential benefits, it can automatically create organization charts reflecting the new legal entity's organizational structure, saving hours or days of valuable time.

With ONESOURCE State Analytics, you're equipped to model structural changes for:

Optimizing Entity Restructuring and Simplification Reduce compliance costs and audit

isk, while gaining greater predictability over a wider range of financial results. Using ONESOURCE State Analytics smart modeling wizards, tax professionals are able to model potential legal entity structures and accurately measure the effectiveness of each structure across a range of financial results.

ONESOURCE State Analytics can also evaluate thousands of potential entity structures. Users are able to identify legal entity structures that meet their dynamic business requirements and offer them the best possible tax position.

Optimizing Mergers and Acquisitions

ONESOURCE State Analytics adds the acquired company's legal entity structure to the existing structure. Users can compare the multiyear tax liability between the two structures across a range of financial forecasts. Alternate structures can be easily evaluated across multiple years using smart modeling wizards and optimizers - all in a fraction of the time it would take to analyze the initial tax liability models for a single year using a spreadsheet.

With ONESOURCE State Analytics, you are able to examine restructuring options when they have the most flexibility to make structure changes - at the time the merger or acquisition occurs.

Analyzing the Impact of a Divestiture

With ONESOURCE State Analytics, the impact of a divestiture can be assessed in a few simple steps and the results can be compared with those of the original structure. In addition, alternate structures can be easily created and analyzed using the ONESOURCE State Analytics smart modeling wizards and optimizers.

In ONESOURCE State Analytics, all filing options are parameter based. With a single change, you can quickly see the impact of every filing election. It takes care of the complicated multiyear calculation logic across a range of financial results. Because of the simplicity of scenario creation, each election can now be fully analyzed and understood, enabling companies to make the best choice to optimize their tax positions.

With ONESOURCE State Analytics, companies get a comprehensive picture of the effectiveness of each election, including:

Filing Separate or Combined

Some states provide companies with the option either to file separately or to be included in a combined return. ONESOURCE State Analytics users can model, analyze, and document the tax impact of either choice simply by creating a combined filing group and adding the appropriate members.

Worldwide or Water's-Edge Election

Some unitary states allow companies to exclude some foreign entities from the combined filing by electing Water's Edge. In some cases, this decision can be in effect for multiple years. With ONESOURCE State Analytics, users easily model the effect of this election by changing the filing option for their unitary state.

Check-the-Box for Flow-Through Entities

Some states dictate how a partnership must file, ignoring an entity's federal check-the-box election. Other states have different flow-through treatments for different types of partnerships or require allocation of partnership income rather than combined apportionment. Users of ONESOURCE State Analytics easily understand the impact of these rules by changing their check-the-box elections from year to year, and modeling any changes to the partnership treatment rules.

Foregoing Carryback of NOLs

Some states provide an election to forego NOL carryback, allowing an NOL to be carried forward without first attempting carryback. ONESOURCE State Analytics keeps track of which states allow this election, enabling a user to simply make the election for their entities and watch the ripple effects cascade across years in their multiyear scenario.

Apportionment Method

For industries with unique apportionment methods, we also offer robust "What if" apportionment modeling capabilities that make it possible to quickly determine the full tax impact of M&A activity, changes in the business forecast or legal entity structure, proposed legislation, and audit settlements.

Examples of ONESOURCE State Analytics specific industry measurements include:

• Revenue miles, revenue tons, takeoffs/landings, and tons handled for transportation
• Subscribers and audience size for broadcast
• Banking receipts and deposits for financial services
• Barrels and pipeline traffic units for energy

With ONESOURCE State Analytics, companies can now quickly and accurately pinpoint the best transaction pricing models. The ONESOURCE State Analytics transfer pricing functionality allows companies to easily determine whether changing the transfer price will increase or decrease their tax liability.
Hundreds of individual transactions can be simultaneously adjusted by changing a single field in the scenario. The calculation logic automatically and reliably accounts for the differences in taxable income and eliminations. Using ONESOURCE State Analytics, you can accurately forecast the tax liability of:

Intercompany Transactions

ONESOURCE State Analytics provides customers with fast and accurate modeling of intercompany transactions, supply-chain transactions, and derived value transactions (such as a royalty transaction derived from an entity's revenue). In addition, it automatically accounts for expense disallowance (anti-PIC legislation) and group eliminations. ONESOURCE State Analytics customers can quickly model CUP, Cost +, Resale -, and CPM intercompany transactions, and can analyze the effect across a range of financial forecasts.

Transfer Pricing

ONESOURCE State Analytics enables customers to quickly measure the impact of various rates and to leverage technology to find the optimal transfer price across thousands of individual transactions.

ONESOURCE State Analytics enables users to fully understand the impact of audit concessions. ONESOURCE State Analytics multiyear calculation logic allows tax professionals to simply add an audit adjustment in a given year and instantaneously flow the result across every subsequent year and every state in the scenario.

NOL and credit carryforwards are automatically recalculated, giving a true picture of the overall impact of each possible audit adjustment. With this capability, companies are better prepared to negotiate settlements and defend their tax strategies.

Using ONESOURCE State Analytics, you can accurately model audit examinations and settlements, such as:

Federal Revenue Agents Report (RAR) Adjustments

Changes to federal income caused by Federal RAR adjustments will roll down to the state level and impact the state returns. These changes can impact NOLs as well as credit utilization across multiple years. ONESOURCE State Analytics automatically recalculates the impact of these adjustments on the state level, including changes to NOL and credit generation, utilization, and expiration as a result of the Federal RAR.

State Requires Combined Filing

When a company has multiple subsidiaries in a unitary state but is filing on a separate return basis for at least one subsidiary, some states have successfully argued that a unitary relationship exists. Therefore, the unitary return should include the excluded subsidiary. This situation may also occur when a combined filing is permitted but the companies are filing on a separate-company basis. Leveraging ONESOURCE State Analytics, customers can quickly and easily analyze the impact of filing on a combined or unitary basis.

State Claims Nexus

In the last few years, states have successfully argued for broader nexus standards. As a result, more companies are forced to file in states where they had previously claimed a lack of nexus with the foreign jurisdiction. With ONESOURCE State Analytics you can measure the impact of nexus in different jurisdictions in a matter of minutes, allowing you to quickly model the impact of nexus changes on your overall tax liability and on your destination/throwback sales.

State Disallows Intercompany Transactions for Intangibles

The Anti-Passive Investment Company (PIC) expense disallowance for intercompany royalty and interest transactions requires that companies be able to model these disallowance rules. With ONESOURCE State Analytics, you can modify the state disallowance rules for your intercompany transactions to model the expense disallowance.

ONESOURCE State Analytics enables tax departments to efficiently and accurately model new legislation with a simple, parameter-based approach that automatically handles the complicated business logic for calculations such as NOL carry-forwards, check-the-box treatments, and sales throwback. By using ONESOURCE State Analytics, you will spend less time building and maintaining spreadsheets and more time evaluating and analyzing results.

Leveraging ONESOURCE State Analytics, corporations can fully understand the multiyear impact of legislative changes such as:

State Changes to Net Operating Loss (NOL) Deduction Rules

Some states have changed their NOL deduction rules to either put a moratorium on utilization in place or otherwise limit the utilization of NOLs. With ONESOURCE State Analytics, you can change the NOL generation and utilization rules to reflect proposed NOL changes and analyze the effect on your state tax liability.

State Changes to Apportionment Formulae and Factor Calculations

In the current fiscal climate, many states have made changes to the apportionment factor or apportionment rules. ONESOURCE State Analytics tax rules are fully customizable, enabling you to model changes to factor weights and throwback rules, and to define the apportionment accounts included in the factor calculations.

ONESOURCE State Analytics also offers robust "What if" apportionment modeling capabilities for industries with unique fourth-factor apportionment methods. Examples of specific industry measurements include:

• Revenue miles, revenue tons, takeoffs/landings, and tons handled for transportation
• Subscribers and audience size for broadcast
• Banking receipts and deposits for financial services
• Barrels and pipeline traffic units for energy

State Disallowance of Intercompany Transactions for Intangibles

The Anti-Passive Investment Company (PIC) expense disallowance for intercompany royalty and interest transactions requires that companies be able to model these disallowance rules. ONESOURCE State Analytics allows you to modify the state disallowance rules for intercompany transactions to model the expense disallowance.

State Changes to Flow-Through Entity Treatment

States have different treatments for partnerships based on the type of partnership, the type of partner, and whether the partner and partnership are unitary. With ONESOURCE State Analytics, you can easily change the partnership rules to analyze the impact on your state tax liability when the state proposes a change to check-the-box treatment or to how income is treated (allocated or apportioned) in specific situations.

States Decoupling from Federal Bonus Depreciation

Many states have decoupled from the Federal Bonus Depreciation that began as part of the Job Creation and Worker Assistance Act of 2002 (JCWAA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). A few states have unique add-back and recapture rules for the federal bonus depreciation. ONESOURCE State Analytics users can analyze the yearly impact of the various state rules on their multi-year scenario and get a clear picture of how timing differences caused by varying state rules will affect their state tax liability on a multiyear basis.